Archive for March, 2020|Monthly archive page


In Uncategorized on 03/23/2020 at 17:45

I didn’t blog Anthony McBryde, Docket No. 4820-19L, filed 1/16/20, because he was lost in the plethora of decisions, opinions and orders from Tax Court that day. Anthony had some protester jive, a couple 1040s with balances and additions he never paid, a couple SFRs he never petitioned (hi, Judge Holmes), and around $125K of unpaid gift taxes and chops for three (count ‘em, three) years resulting from math errors. STJ Diana L (“Sidewalks of New York”) Leyden told IRS to lien and levy.

Now Anthony wants STJ Di to fix the amount of an appeal bond, in Anthony McBryde, Docket No. 4820-19L, filed 3/23/20.

I’m sure all my readers, doing the Aida number to avoid Corona, will shout “but you can’t do that! Section 7485(a) and Taishoff’s blogpost ‘Crave the Bond,’ 6/9/15!”

And so says STJ Di, echoing IRS’ response to Anthony’s motion. “…section7485(a), of the Internal Revenue Code, which requires a taxpayer to post an appeal bond in order to stay collection, does not apply to collection due process (CDP) cases. By its terms, section 7485 applies only to the collection (and assessment) of deficiencies, not assessed liabilities that are the subject of a CDP case. Because the above-referenced case is a CDP case, an appeal bond is not required.” Order, at p. 1.

So Anthony can appeal, but IRS can grab while he does.


In Uncategorized on 03/23/2020 at 13:45

Tax Court goes goes online and off the map through 6/30/20. Here’s the scoop:


In Uncategorized on 03/20/2020 at 14:59

Judge David Gustafson brooks no snark or sneer. He will allow none of the mishegas (please pardon an arcane technical term) in which certain litigators engage to vex, oppress, harass or annoy their opponents.

And it matters not whether the litigator is a pro se, petitioners’ counsel or IRS.

Here’s Peak Potentials Training International, Docket No. 23373-18, filed 3/20/20.

PPTI’s counsel, to whom I’ll hereinafter refer as John M., objected to IRS’ motion for leave to serve the exhibits, inadvertently omitted, from IRS’s response to PPTI’s summary J motion. IRS’ motion for leave was “appropriately” filed, Order, at p. 1. Likewise “appropriately,” IRS’ counsel asked John M. to consent. Id.

John M. said OK, but as I have a date certain two weeks from your response to reply to your response, and as you’re going to serve me two business days late, give me a two business days extension to reply.

IRS’ counsel, whom a docket search reveals is William A. McCarthy, Esq., in Seattle, WA, responds as follows. “Petitioner’s counsel informed respondent’s counsel that petitioner objects to the granting of this motion unless petitioner’s time to reply is also extended by two business days to April 1, 2020. Respondent’s counsel informed petitioner’s counsel that such a request would not be (and is not) part of this motion.” Order, at p. 1.

Judge Gustafson: “Respondent’s description of his dealings with petitioner does not reflect the level of cooperation and courtesy that we expect and normally see. We think his position was unreasonable.” Order, at p. 2.

Motion to serve late denied without prejudice.

I’ll translate, for Mr. McCarthy’s benefit, if he reads this my blog (which I doubt): “Give him the two business days. The judge won’t object.”

I may also point out our New York Standards of Civility: “Lawyers should avoid unnecessary motion practice or other judicial intervention by negotiating and agreeing with other counsel whenever it is practicable to do so.” Section II(A). Maybe so Ch J Maurice B (“Mighty Mo”) Foley might consider adding something to this effect to Rule 201.


In Uncategorized on 03/20/2020 at 14:03

At least they aren’t for Section 7482(a)(2)(A) interlocutory appeals. So says Judge Albert G (“Scholar Al”) Lauber in Belair Woods, LLC, Effingham Managers, LLC, Tax Matters Partner, Docket No. 19493-17L, filed 3/20/20.

All y’all will recollect Judge Lauber leading a four-way Tax Court bench split that laid some, but not all, of the chops IRS was seeking on Belair. What, no? Then see my blogpost “Can We Talk – Part Deux,” 1/6/20.

So Belair wants an interlocutory appeal. Specifically, they want 11Cir to rule on “…our determination that the Commissioner met the supervisory approval requirement with respect to the penalties asserted under section 6662(c), (d), and (h).” Order, at p. 2.

These are negligence, substantial understatement, and gross valuation misstatement chops, and Belair is disputing the Boss Hossery therewith involved.

Judge Scholar Al: “Before certifying an order under section 7482(a)(2) the trial judge must confirm that the order involves a ‘controlling question of law’ and that ‘substantial ground for difference of opinion’ exists as to the correctness of the determination underlying the order. The judge must also ascertain whether an immediate appeal will ‘materially advance the ultimate termination of the litigation.’ In assessing these factors the Court must weigh the policies favoring the ‘avoidance of piecemeal litigation and dilatory and harassing appeals.’ We do not believe that the supervisory approval issue involves a ‘controlling question of law’ or that immediate appeal of this issue would ‘materially advance the ultimate termination of the litigation.’ Order, at p. 3.

The Section 7482 interlocutory appeal has to be a clean-kill, one-shot question of law, with no record to review. Even if the appeal could result in a reversal, that isn’t enough. The appeal would have to obviate the need for a trial or materially shorten one.

And since this is another conservation easement case, the appeal would do none of the above. There still is perpetuity to decide. Neither would it shorten the trial, as the same experts upon whom Belair relied for a reliance-on-professionals defense to the chops would have to testify as to their expert opinions on valuation on the trial.

Takeaway- Unless all you’re trying is whether whatever piece of paper IRS relies upon for the chops is the proper Boss Hoss sign-off, getting an interlocutory appeal on the chops issue is a real longshot.



In Uncategorized on 03/20/2020 at 13:11

Remember Judge Vasquez’s statement that we don’t need no bills? Well, see my blogpost “We Don’t Need No Stinkin’ Bills,” 11/18/19. OK, but now, even if he had bills, Lior Blas, Docket No. 1031-17, filed 3/20/20, is off the hook because 11USC§362(a)(8).

Ya see, before Lior went on trial in June, 2018, he filed Chapter 13 the previous November, which was rolled into a 7, and had neither been discharged nor dismissed from USBCDAK (that’s United States Bankruptcy Court for the District of Alaska) when trial took place. Lior, being pro se (natch), never disclosed same.

Lior got discharged before Judge Vasquez issued the opinion and decision more particularly bounded and described in my blogpost hereinabove set forth, as my lunching-at-home-with-two-Grey-Goose-martinis colleagues would say.

But IRS somehow got the word of the foregoing, and now moves to vacate the decision. Lior agrees.

“According to respondent, the automatic stay under 11 U.S.C. sec. 362(a)(8) commenced on November 30, 2017, and was in effect during the June 19, 2018, trial of this case. Respondent asserts that the automatic stay ended when petitioner received a discharge on May 31, 2019. Respondent also asserts that the Memorandum Opinion and Decision are void because they were based on evidence from a trial that occurred in violation of the automatic stay.

“Petitioner agrees with respondent that the Decision is void. However, petitioner maintains that his bankruptcy proceeding remains active and that the automatic stay remains in effect.” Order, at pp. 1-2. (Footnote omitted, but it says IRS never heard about Lior’s bankruptcy until this past January).

Golsenizing to 9 Cir, Judge Vasquez finds that any part of any Tax Court case carried on after the filing of the petition is void, not voidable, so his carefully crafted T. C. Memo. and Decision are void. Happily, my blogpost remains.

It doesn’t matter that said T. C. Memo. and Decision came after discharge, the trial was between petition and discharge and taints the whole shebang.

“Regardless of whether the automatic stay remained in effect after the discharge, our Memorandum Opinion and Decision are void. Assuming the automatic stay terminated when petitioner received a discharge on May 31, 2019 (as respondent contends), the Memorandum Opinion and Decision are based on factual findings from a trial held in violation of the stay and are therefore void. See Trustees of the United Health and Welfare Fund v. N. Kofsky & Son, Inc., No. 8 Civ. 11219, 2015 WL 59173, at *2 (S.D.N.Y. Jan. 5, 2015) (stating that bench trial ‘was void and without vitality because it occurred while the * * * stay was in effect.’); Cramer v. Grover, 7 B.R. 133, 135 (Bankr. D. Col. 1980) (holding that a State court judgment was void because it was based on evidence from the continuation of a trial in violation of the automatic stay). Conversely, assuming the automatic stay was in effect when we issued the Memorandum Opinion and entered the Decision (as petitioner contends), these actions violated the stay and are void. See Shutts v. Commissioner, T.C. Memo. 2010-160 (voiding a Tax Court decision because it was entered while the automatic stay was in effect).” Order, at pp. 2-3.

So vacation.

But where do we go from here? Remember 11USC§105: Bankruptcy Court can order reimposition of the 11USC§362 automatic stay. So let IRS and Lior make up for their previous nondisclosures by letting Judge Vasquez know what, if anything, USBCDAK did to that effect that is still in effect now.


In Uncategorized on 03/19/2020 at 16:01

No opinions, no designated hitters, The Glasshouse on lockdown, and 209 orders, the greatest number of which announce cancellations of trial sessions in San Diego, Chicago, Los Angeles, Buffalo, Syracuse, Shreveport, and New Orleans (did I miss any?).

Needless to say, views on this my blog have plummeted.




In Uncategorized on 03/18/2020 at 16:31

I paraphrase Sir Paul, because Sean MacNamee, 2020 T. C. Memo. 37, filed 3/18/20, is contesting just seventeen (count ‘em, seventeen) $1K Section 6694(a) preparer chops, IRS having dropped pre-trial the other nineteen (2 for an out year, and 17 Section 6694(b) $4K willful-or-reckless chops) arising out of Sean’s tax prep, and Sean conceding the income tax he owes.

Sean claims he never got a final administrative determination when he went to Appeals on the 36 (although Appeals did drop 2, leaving 34, of which IRS as aforesaid is only challenging 17). Sean wouldn’t sign a Form 872-D, preparer chop version of the consent to extend the applicable 3SOL. So, as there were only a few days until 3SOL ran out, and the chops are assessables, IRS chopped Sean for the whole 36.

Sean sent in Letter 12153, but at Appeals he was told he couldn’t contest liability, which IRS now concedes was wrong. Sean petitioned that four (count ‘em, four) months late, and so was tossed.

So Sean then got a NITL, went to Appeals, got told he had had a prior chance to contest, so NOD, which he now petitions.

Clear? Thought not. Howbeit, Judge Albert G (“Scholar Al”) Lauber thought it was.

Sean claims he had no chance to contest, and cites a Section 6672 TFRP case.

Judge Lauber: “Petitioner participated in a CDP hearing regarding these penalties. During the hearing he attempted to challenge the penalties, but SO1–erroneously, as respondent now concedes– did not permit him to do so. Petitioner could have challenged SO1’s determination, as well as his underlying liability for the penalties, by filing a timely petition for review in this Court, which he failed to do. Because he failed to take advantage of a prior opportunity to contest the penalties, his underlying liability for the penalties was not properly before SO2 during the second CDP hearing, and he is thus precluded from now advancing that challenge in this Court.” 2020 T. C. Memo. 37, at p. 13.

But what about a “final administrative determination”?

Note that IRS conceded the 17 Section 6694(b) $4K willful-or-reckless chops because, unlike the $1K Section 6694(a) chops, the $4Ks can be assessed at any time; no 3SOL, so Sean should’ve gotten a hearing and a final administrative determination on those.

But as for the $1Ks, the Section 6672 TFRP case is inapplicable, because Section 6672(b)(3) expressly extends the 3SOL until “30 days after the Secretary makes a final administrative determination with respect to such protest.” Section 6694(a) has no such provision.

Takeaway- Petition. When in doubt, petition. When you have any non-frivolous argument (unlike Sean’s claim for $1 million in damages to offset his own income tax liabilities), petition.

Takeaway 2- Sometimes an Appeals goof can help, when it’s too late to remand. If SO1 had given Sean the chance to contest, and he lost, he’d be worse off. Likewise if he’d timely petitioned SO1’s goof and gotten a remand.






In Uncategorized on 03/17/2020 at 17:03

Subtitle C Employment taxes can spill over into what appears to be income tax, causing much confusion. Judge Albert G (“Scholar Al”) Lauber has such a case for us today, Research Scientific Services LLC, Docket No. 11424-19L, filed 3/17/20, a designated hitter on a strangely silent St. Patrick’s Day.

Of course, the lien here for is unpaid Forms 940 and 941 to the tune of better than $200K.

Spill-over is on RM, an officer of Research Scientific and its representative in this case. RM is trying to solve his own problems with IRS. So when Research Scientific got its own NITL, RM told Judge Scholar Al he thought that, if he squared up with IRS, he needn’t deal with Research Scientific’s problems, and ducked the CDP hearing.

“Mr. M stated that, in addition to the collection action involving petitioner’s unpaid employment taxes, the IRS also sought to collect certain taxes from him personally. Mr. M represented that he was negotiating with an IRS collection officer about his individual liabilities. Assuming that those negotiations would also resolve petitioner’s employment tax liabilities, Mr. M suggested that the notice of determination may have been issued in error.” Order, at p. 2. (Name omitted).

I’ll bet RM conflated the Section 6672 TFRP responsible person chops for unpaid FICA/FUTA/ITW with the taxes themselves; they are two separate things. RM, being pro se, missed the point.

But IRS wants, and gets, summary J against Research Scientific sustaining the NITL.

“In its response to the motion for summary judgment, petitioner admits that it was at fault for failing to participate in the CDP proceedings, an error attributable to Mr. Moffat’s mistaken belief that he ‘was resolving the issue with the [other] IRS officer.’ Mr. M represents that he has now executed an installment agreement with the IRS covering his personal liabilities, and he expresses hope that a similar agreement can be reached covering petitioner’s employment tax liabilities. Unfortunately, we cannot consider that option in this CDP case because petitioner failed to propose any collection alternative to the SO. See Solny v. Commissioner, T.C. Memo. 2018-71, at *10 (‘We have consistently held that it is not an abuse of discretion for an Appeals officer to reject collection alternatives and sustain collection action where (as here) the taxpayer has failed, after being given sufficient opportunities, to supply the necessary information.’); see also Gentile v. Commissioner, T.C. Memo. 2013-175, 106 T.C.M. (CCH) 75, 77, aff’d, 592 F.App’x 824 (11th Cir. 2014). However, petitioner is free to submit to the IRS at any time, for its consideration and possible acceptance, a collection alternative, in the form of an offer-in-compromise or an installment agreement, addressing the employment tax liabilities involved here.” Order, at p. 4.

For more on Solny, see my blogpost “Decision Equals Determination,” 5/22/18.

But Judge Scholar Al holds out hope for RM, and a suggestion for IRS.

“It appears to us that petitioner and Mr. M are genuinely interested in resolving all of their tax liabilities in a coherent manner. Mr. M expresses concern that a levy on petitioner’s assets would ’put the existing personal installment agreement at risk,’ which would be an unfortunate turn of events. We are hopeful that respondent’s counsel will work with the other IRS officers involved in this process to secure a sensible and comprehensive resolution.” Order, at p. 4. (Name omitted).

Crosstalk is always harmful.



In Uncategorized on 03/16/2020 at 16:50

Judge David Gustafson compares and contrasts a whistleblower rejection (failure to satisfy the basic requirements for an award; see 26 C.F.R. sec. 301.7623-1(c)(1), (4)), and denial (a determination that is made after the Ogden Sunseteers engage in some substantive consideration of the claim).

A blower who gets blown out on each count for his two conjoined claims is first-sergeant-turned-bookkeeper Walter Nicklaus Cline, 2020 T. C. Memo. 35, filed 3/16/20.

Again we have a lament for the constricted jurisdiction of pore l’Il ole Tax Court, the poor relation of the Federal judiciary.

“It is not to the Tax Court but to the Secretary of the Treasury that Congress has given the authority to ‘make the inquiries, determinations, and assessments of all taxes’, sec. 6201, and to ‘collect the taxes’, sec. 6301. The Tax Court has no practical means for evaluating the IRS’s audit priorities, its allocation of its audit resources, or its judgments about the likelihood of collecting particular liabilities. Congress has given to the Tax Court not plenary oversight over the IRS but rather circumscribed jurisdiction to review certain actions in certain circumstances. In the award context, Congress has given the Tax Court jurisdiction to review the determinations of the WBO. Consequently, ‘we do not review the IRS’s decision whether to audit a target in response to a whistleblower’s claim and * * * we have no authority to require the IRS to explain a decision not to audit.’ Lacey v. Commissioner, 153 T.C. at __ (slip op. at 30).” 2020 T. C. Memo. 35, at p. 15 (Footnotes omitted, but they just give more examples of Treasury’s broad enforcement and administrative powers.)

For the Lacey story, see my blogpost “The Whistleblower Office – Blown,” 11/25/19.

In the first instance, the Ogden Sunseteers didn’t need no operating branch look-see to toss Walt’s beefs about Target 1, because 3SOL had run on the years wherein Walt claimed the skullduggery occurred, and the skullduggery was non-recurring, so confined to those out years. Remember, Tax Court cannot “‘… review the IRS’s decision whether to audit a target in response to a whistleblower’s claim’. Lacey v. Commissioner, 153 T.C. at __ (slip op. at 30). Even if we did proceed to review the classifiers’ reasoning, they were right that assessment of tax would be barred by the three-year period of limitations of section 6501(a). It is also true, as Mr. Cline insists, that section 6501(c)(1) provides an exception to the three-year bar: ‘In the case of a false or fraudulent return with the intent to evade tax, the tax may be assessed * * * at any time”, so that where an audit yields evidence proving fraud, the three- year limit does not apply. However, ‘[i]n any proceeding involving the issue whether the petitioner has been guilty of fraud with intent to evade tax, the burden of proof in respect of such issue shall be upon the Secretary’, sec. 7454(a), ‘and that burden of proof is to be carried by clear and convincing evidence’, Rule 142(b). Especially when it faces the prospect of that heightened burden of proof (such as to prove fraud, or even to prove a substantial omission of an item having a six-year period of limitations under section 6501(e)), the IRS’s decisions about how to allocate its audit resources must take into account the costs of developing ‘clear and convincing’ evidence and its hazards of litigation. We do not review these judgments that Congress has committed to the agency.” 2020 T. C. Memo. 35, at pp. 16-17, footnote 9. Rejection affirmed.

As for Target 2, all Judge Gustafson can say is that the classifiers who eyeballed Walt’s info weren’t completely offbase when they denied Walt an award. “In reviewing the WBO’s rejection of the second claim, we do not substitute our judgment for its judgment but review only for an abuse of discretion. The WBO’s conclusion that the claim was ‘speculative’ does not appear to lack a sound basis in fact and law because the claim stated that Mr. Cline was ‘uncertain’, that ‘we believe’ there was improper bookkeeping, that there were ‘[u]nknown [e]xpenses’, that there was ‘probable fraud’, and that the taxpayer’s manipulations were ‘without rhyme or reason’. (Emphasis added.)” 2020 T. C. Memo. 35, at pp. 18-19. Denial affirmed.








In Uncategorized on 03/15/2020 at 19:14

Here’s a leftover from last hectic week.

Judge Elizabeth A. (“Tex”) Copeland seems to have acquired the potters’ field at USTC. The potters are the people who supply herbal medicaments in States where the same is legal for use in medicinal or recreational contexts, or both.

Judge Tex designates Jo Ann Sharp & Randall W. Sharp, Docket No. 7196-19, filed 3/11/20, as another in the Constitutional challenges to Section 280E’s traffic shutdown. Jo Ann & Randall must be on the same page as Ryan Foster, who made an appearance on this my blog yesterday in similar circumstances. See my blogpost “Let It All Hang Out – Once More,” 3/10/20.

Same story today. Jo Ann & Randall are connected with High Mountain Medz LLC, but fail to describe the activities thereof sufficiently to enable Judge Tex to decide what HMM does.

Summary J denied, without prejudice.